The SEC's long history of voicing concern over 12(b)-1
mutual fund fees while neglecting to actually do anything to revise them has continued
unabated this year. In
July of 2010, the SEC cited concerns over investor awareness and understanding of the
fees as cause for change.
"Despite paying billions of dollars, many investors do not understand
what 12b-1 fees are, and it's likely that some don't even know
that these fees are being deducted from their funds or who they are ultimately
compensating," said Mary Schapiro (as quoted by the
The fees, which can range from 0.25 to 1 percent of a fund's net assets
are considered operating expenses but are often used to compensate brokers
and others who sell fund shares. The proposal, which
InvestmentNews said garnered more than 2,400 comment letters, included a requirement
for clearer disclosures. It also included a change that would treat any
12(b)-1 fees over 0.25 percent as assets that must be paid over time.
As of May 2011, the proposal has not yet been enacted. But, according to
a May 6 InvestmentNews article, Mary Schapiro says the commission remains
focused on the fees and expects to revisit the issue of revision some
time this summer. Ms. Schapiro also said that the commission plans to
take the comment letters into account in its decisions over reform. She
did not comment on whether the 2010 proposal would be re-issued.